Personal Finance Archives

Can you imagine a pre-schooler owning a car and having debts amounting to hundreds of thousands of dollars? And think of a teenager having a yacht and lots of credit.

These cases are real according to NBC Bay Area’s Investigative Unit. A lot of children are growing up having debts because their identities were stolen. The bad effects on these children with stolen identity are bad credit, bad background, loan that were defaulted and lost opportunities. It also costs families of these children $13 billion every year.

The researchers believe that these people who are stealing children identities are involved in an organized crime and illegal immigration. They target the social security number, birthdates and other vital information that could be used.

Identity theft of children below five years old has increased by 105% versus last year according to the research made by AllClear ID.

The CyLab of Carnegie Mellon University has conducted a study which shows that 10.2 % of the 43,000 children they checked had their identity stolen. The CyLab study was the first to conduct the first large scale study on stolen identity of children. While the 10.2% may seem a small percentage, this is 51 times than the stolen identity of adults according to CyLab.

One of the victims is ten- year-old Reilly Dennedy. Reilly’s mother said that the identity of his child was stolen 11 years before Reilly was born. It was easy for the thieves to use social security numbers because the numbers are released sequentially. At present the social security numbers are not anymore released sequentially.

It was found out by Dennedy with the help of police that one thief used Reilly’s name to acquire credit and another used her social security number to put up a utility account.

According to Cylab, the thieves used the stolen identity to buy large items like homes, cars, boats and even to get loans and employment.

The victims have never found out who stole their identity.

Dennedy is the Chief Privacy Officer at Mcdee. He is also the founder of The Identity Project, a website which educates people on how to avoid identity theft. But it is ironic that his family is a victim of this theft. He said he never thought it could happen to his family.

The crime is fast growing because not enough penalties are imposed on those who are involved in the crime, according to Dennedy. Parents have to be very careful in protecting their children’s identities including the infants.

The CyLab recommends that

* Creditors must do careful and detailed background checking.

* Parents should secure safely the social security number of their children.

* Parents should educate their children at early age about Cyber security and to secure and protect their social security number.

* The cyber risk of children should be checked regularly to find out whether their identities are secured and not stolen.

The ninth largest bank the Guaranty Bank has been facing a challenge with their financial status for five years now. The amount of their losses accumulates to about $20 million; this is according to their annual monitoring data.

By the end of the first quarter of this year, the bank had another loss of about $ 5.7 million. Furthermore, its capital which protects the bank from loss from its loans is quickly slipping away.David L. Donihue, a consultant from the bank said that they are currently facing a very hard phase.

But Doug Levy, the chief executive of Guaranty says that they are progressing into a better loan portfolio, and the bank is looking for more investors to uplift and recapitalize their finances.

The largest loss of the bank was back in September 2009 when many Americans were falling into the recession and there was massive unemployment. The losses amounted to about $ 52.3 million this is according to their Federal Deposit Insurance Corp. records. The bank has belonged to the Levy family for decades and so far no one has set their eyes on purchasing the estate from them.

During their second set or mortgages a major loss has been inflicted in the bank’s portfolio. The bank has about 160 branches in Wisconsin, Georgia, Michigan, Illinois and Minnesota. Most of the branches across these five states are found in grocery stores and operate in lengthy hours, which according to Donihue is expensive for the bank.

The Guaranty has increased another $10.6 million to its loan-reserves in order to cover for their doubtful-debt accounts.

Levy says that the bank still expects to eventually regain its loss from their loans. The recession and the financial crisis have made it compulsory for banks to have more capital.The chief executive said that Guaranty has been making efforts to retrieve their old status in their financials. They are dedicated in trying to make these efforts work, though Donihue admitted that it’s not going to be easy.

It is normal that lenders would require financial statements and paid bill receipts from their clients who would want to avail a loan, however nowadays; these institutions are requiring more than just financial information.

According to Frank Donnelly, the current president of the Mortgage Bankers Association of Metropolitan Washington, there was a recent case of abnormality in one of their borrower’s bank account;the woman had to explain a deposit of $200 in her account. She explained that the money belonged to her ex-husband that she has been raising a child with.

The loaning party required for a copy of her divorce papers even if she and her ex-husband have been separated for 17 years. Borrowers who have been processing for long term loans know how closely these institutions are watching their clients’ ability to payback their mortgages.

Lenders are taking strict measures because they want to prevent buying back loans if the loan fails. Customers will have to face tougher security and submit more supporting papers to answer the questions of the consumers.

For some these procedures that lenders are taking are too much, but for a lender’s point of view, they are trying to save themselves from the casualties incase all-else fails. Not only are they afraid of buy backs or failure on the loans, the Consumer Financial Protection Bureau, the government agency in chargeto investigate these institutions are very critical and strict in their guard against rule breakers.

But Stella Adams, a fair-housing advocate in North Carolina, said lenders are going too far. She said banks should use “solid, old-fashioned underwriting,” such as the guidelines used before the housing boom. Right now, lenders are making it too difficult for people to get financing, she said.

But Christie Alderman, a vice president of a loaning industry defends their side from scrutiny. According to her, the system they are imposing is their way to defend themselves from scams and deceit from consumers.

JPMorgan Chase is in for more bad news as their credit continues to decrease these past few days. Fitch Ratings gave a lower rating of A+ to the financial agency after they lost $2 billion worth of dollars earlier last week.

According to Jamie Dimon the Chief Executive of JPMorgan, the company’s situation could get worse because they are not liquid enough and ratings companies are asking questions about their company’s risk management status, framework and practice.

The ratings industry head, says that JPMorgan Chase’s reputational and risk governance issues are not as good as they used to be however the current amount that the company is losing can be managed. According to reports JPMorgan’s, last week’s market shares was at $36.96, it went down by 9.3%, then after just a few hours it plunged further down to 0.8% that’s $36.67.

The bank continues to be criticized and ridiculed by politicians and lawmakers as the ratio continues to drop. Thus a more convenient way for the firm is to have tighter measures and adapt to something like the Volcker Rule which can take care of too much risk-taking done by large banks.

The bank’s Executive Chief Mr.Dimon who has been getting positive regards about his efforts to get the bank back in tact has been open about his thoughts in implementing laws and regulations especially the Volcker Rule.

This however stirs questions from external sources whether the company has tried to implement the regulation in the past. However the total loss of $2 billion that was reported last week has weakened the arguments of the bank for their new measures. Bank investors are currently having difficulties in getting access to financial institutions and international trade and businesses. Though JPMorgan Chase like the Bank of America and Citigroup have reports that can still be further evaluated, their unseen transactions and unclear records for their strategies could be destructive for them.

The majority of the public have a time in their lives that they had poor credit and those who already experienced this are aware that it is never easy to have no access to credit. Those with poor credit can still loan money but they will be charged higher interest rates because they are a risk to the lender.

However, if they manage their credit well, then their credit scores will improve. Here are some tips for those with poor credit on how to get a loan and improve their credit rating.

First, consider getting payday loans, which are short-term loans that are created according to your capacity to pay off the loan. When getting a payday loan, your credit report is not checked. Moreover, a payday loan does not have an effect on your credit score, except when you do not completely pay off the loan.

A payday loan is ideal when cash is needed immediately for unforeseen happenings. You need a regular source of income and checking account as well.

Second, seek the help of a broker, especially when you are planning to apply for a mortgage or home improvement loan and you have poor credit. There are some brokers who have a certain connection with several lenders and banks, so they can assist borrowers with either good or poor credit history in getting loans appropriate to their needs. In addition, brokers are able to offer assistance to those people with poor credit since they know the credit terms of a lot of lenders.

Third, consider a cosigner, especially someone who has good credit, for instance, a family member, a friend, or an acquaintance. If you fail to pay the loan, the cosigner has the responsibility to pay your loan instead. Also, once you become a borrower with a cosigner, and pay the loan on time, then your credit score will improve.